10 views on the market from Jeremy Grantham

Defending GMO’s dour U.S. growth projection

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Mr. Grantham responds to critics of his third-quarter letter in which he declared that the U.S. was entering a permanent slow-growth mode of about 1.4% per year. Specifically, Mr. Grantham defends GMO’s pessimistic view of expected U.S. population growth (less than 0.5%), pointing out that the data came from the U.S. Bureau of Census. “And as for productivity, we extended the 1.3% average for the last 30 years out for 30 more years,” Mr. Grantham writes. “This is clearly a very friendly assumption given: a) the recent 1.3% in productivity growth of the last 30 years had declined a lot from its 40-year surge of 1.8% after World War II; and b) the fact that the segment of much higher productivity manufacturing — has declined to a mere 9% of total labor from 19% in 1980 and continues to decline.”